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Archive for June 24th, 2011
Bill Still And Tickerguy on Capitol Hill, Plus More
June 24th, 2011 | 
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Co-Founder of FedUpUSA, Karl Denninger and creator of The Secret of Oz, Bill Still went to Washington DC on Monday, June 20:
Posted in Banks, Bill Still, Congress, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Government, Karl Denninger, Monetary Policy, Money | 
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Cathy McMorris Rodgers Introduces Anti-IMF Bailout Bill
McMorris Rodgers & DeMint Introduce Bill to
Stop U.S. Participation in European BailoutsLegislation Would Block IMF From Using
$108 Billion in U.S. Taxpayer Money for Growing Bailouts
Vice Chair Will be on Kudlow Report at 7:30 PM EST Tonight to
Discuss EU Debt Crisis & U.S. Debt NegotiationsWashington, DC – Rep. Cathy McMorris Rodgers (R-WA), Vice Chair of the House Republican Conference, and Sen. Jim DeMint (R-SC) introduced legislation today that would stop the Obama Administration’s costly bailouts of Greece and other European nations. Since the bailout money is being dispensed through the International Monetary Fund (IMF), their bill would rescind the IMF’s authority to spend up to $108 billion of U.S. taxpayer money which was made available to fund these disastrous bailouts.
“At a time when the federal government is borrowing $5 billion every day on top of a $14 trillion national debt, I am gravely concerned by America’s growing involvement in the ‘gathering storm’ of European bailouts,” said Rep. McMorris Rodgers. “The European debt crisis was caused by too much spending and borrowing and that crisis will not be solved by more spending and borrowing. A ‘Euro-TARP’ is the wrong approach because it’s creating a ‘moral hazard’ that will lead to larger counties — particularly Spain and Italy — standing in line for U.S. tax dollars tomorrow. America should have no part in it.”
“We haven’t even begun to seriously address our own economic difficulties, so it makes no sense to continue bailing out failing European countries,” said Sen. DeMint. “If we don’t reverse our reckless fiscal course, America will be the one in need of a bailout. We need to stop the spending, stop the debt, and pass a balanced budget amendment.”
“American taxpayers have seen more bailouts than they can stomach, and the last thing they should have to worry about are their hard-earned tax dollars being used to rescue a foreign government,” said Sen. John Cornyn (R-TX) who introduced the Senate bill with Sen. DeMint.
In 2009, the Democratic Congress approved the Obama Administration’s request to increase U.S. funding to the IMF by $108 billion. Republicans opposed the measure. Today’s bill rescinds that authorization, returns any unobligated money to the U.S. General Fund, and specifies that the money be used for deficit reduction. The House bill number is H.R. 2313.
The European Union charter requires that every EU member have a debt-to-GDP ratio lower than 60 percent and a budget deficit below 3 percent. Virtually none of the EU members meet that standard.
Since the European debt crisis broke in early 2010, the IMF has committed $353 billion to bailing out European governments, although most of that money hasn’t been dispensed yet. The U.S. is the leading funder of the IMF.
On March 24, 2010, Rep. McMorris Rodgers was the first Member of Congress to publicly oppose U.S. involvement in a European bailout. Greece became the first country to receive an IMF bailout seven weeks later.
A full compilation of the Congresswoman’s work on this issue can be found here.
Posted in bailouts, Banks, Debt, Economic Crisis, Economy, Financial System, Government, Money |
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Feds Seek Life Term For Mortgage Fraud Mastermind
ALEXANDRIA, Va. (AP) — Federal prosecutors are seeking a life sentence for the man convicted of orchestrating a $3 billion fraud while running what had been one of the nation’s largest private mortgage companies.
Defense lawyers, meanwhile, on Friday asked for a term of no more than 15 years for Lee B. Farkas, 58, of Ocala, Fla., the former majority owner of Florida-based Taylor Bean & Whitaker.
Taylor Bean collapsed in 2009 when the fraud scheme unraveled, putting its 2,000 employees out of work. The fraud also contributed to the failure of Alabama-based Colonial bank, which had been one of the country’s 25 largest banks.
Farkas faces up to 385 years after he was convicted in April on multiple fraud counts for masterminding what prosecutors say was one of the biggest bank frauds in U.S. history.
In court papers filed Thursday, prosecutors argued that Farkas should receive the maximum and compared his conduct to Bernie Madoff and other mass swindlers.
A maximum sentence “will send the most forceful and unequivocal message to senior corporate executives that engaging in fraud and deceit in order to pump up your company or line your own pockets is unacceptable and will have severe consequences,” prosecutors wrote, saying that Farkas should receive at least a 50-year sentence.
The sentencing memorandum notes that Madoff, in a $13 billion Ponzi scheme, received a 150-year sentence even though he accepted responsibility and pleaded guilty. Farkas, on the other hand, went to trial and was convicted by a jury, and prosecutors believe he lied on the witness stand and continues to deflect responsibility.
Posted in Banks, Corruption, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Foreclosuregate, Foreclosures, Fraud, Government, Money, Mortgage Loans, Mortgage Modificaton, Mortgage Servicers, Mortgage-Backed Securities |
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Inevitable Catastrophe: The Fruits of Moral Hazard on a Global Scale
Insulate participants from risk with policies like the Bernanke Put and you guarantee destruction of both the market and institutional legitimacy.
Identify the common characteristic of these three statements:
1. The Federal Reserve will never let the stock market decline, i.e. the “Bernanke put”
2. The Chinese government will never let property prices decline
3. The European Central Bank will never let Greece default
The answer of course is moral hazard: a person who is insulated from risk will have an insatiable appetite for risky bets because any gains will be theirs to keep but any losses will be covered by the central bank or government. The global financial authorities’ success in propping up assets (stocks in the U.S., real estate in China, banks in Europe, etc.) over the past three years has strengthened this asymmetric disregard for systemic risk into a dangerously quasi-religious faith that central banks and governments have essentially unlimited power to keep asset prices aloft via printing money, manipulation of markets and financialization of their economies.
What happens if markets crumble despite massive, sustained central bank and government intervention? The institutions that created moral hazard will be revealed as false gods, and that faith will be destroyed.
This loss of faith in the transparent functioning of markets will trigger what I call the delegitimization of both the markets and the institutions which have essentially promised a permanent upward bias in assets.
We can see the global scale of this central bank-cnetral State induced moral hazard in the tight correlation of all markets: the stock exchanges rise and fall in near-perfect unison, oil and gold rise and fall in parallel with equities, and so on.
As I have noted before, beneath the surface there is really only one trade in the entire global marketplace: all assets on one side and the U.S. dollar on the other. Correlation is not causation, of course, but it is more than peculiar that every decline in global equities is matched by a concurrent rise in the dollar.
Transparent, independent markets do not move in lockstep. The campaign to prop up all asset classes with implicit guarantees of intervention has completely insulated institutions and punters who believe that the Bernanke Put and the Chinese government’s equivalent prop under real estate is not just policy but a guarantee of god-like power.
Thus the gains from gargantuan speculative bets are yours to keep, and any losses will be made good by the central bank or government. This is the ideal recipe for misallocation of capital and speculative derangement on an unprecedented scale.
Moral hazard is the ultimate perverse incentive: it rewards all that is unproductive and risky and punishes long-term investment and prudent risk assessment.
A second feature of the global central bank’s moral hazard is the necessity to punish any punters who dare to bet against the banks’ manipulations. Thus Fed Chairman Bernanke could opine that oil would decline and presto-magico, a “surprise” release of oil by central authorities occurs the next day.
This second feature of central bank manipulation leaves a market devoid of short sellers and thus of any buyers as markets crumble.
Once trust is lost, it cannot be won back. Once participants’ faith in the markets and in the god-like power of central bank intervention is crushed, the markets will lose participation on a grand scale. The authorities’ favorite game, goosing asset prices to create an illusion of recovery and rising wealth, will be revealed as a global fraud.
Announcements of future interventions will be scornfully dismissed and thus they will have lost their power to prop up the markets.
All of this flows from the very nature of moral hazard: insulate participants from risk and give them unlimited leverage and “free money” to play with, and what you eventually end up with is catastrophe. There is no other possible end state.
Posted in bailouts, Banks, Corruption, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Fraud, Government, Money, Moral Hazard |
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Site Transition
The site transition is now complete.
Thank you for all your patience and understanding while we once again moved FedUpUSA to another host.
Hopefully, this will be the last time for a while, and we can all get back to spreading the word!
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Posted in Administration, FedUpUSA, Site, Webmaster | 
Tags: administration, FedUpUSA, Site |
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proudly supports:
Bill Still For President
for Congress
Michigan 11th District
By Bill Still
There is only one answer for the world economic situation; monetary reform.
1. No More National Debt
2. No More Fractional Lending
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